May 2012

Credit unions are ready to step in where banks have
refused or reduced business credit

America's small businesses are the driving force of employment and economic improvement. However, a survey by the Small Business Majority, Main Street Alliance and the American Sustainable Business Council found that 90% of small businesses have credit access problems. In fact, 61% of these same small businesses said it's harder to get loans today than it was a few years ago. One of the easiest ways to help these small businesses gain access to the credit they need and start hiring is to lift the credit union member business lending cap, an arbitrary federal limit on credit unions’ business loans set at 12.25% of total assets.

Proposed legislation, S. 2231/H.R. 1418, would raise the cap to 27.5% of assets. The bill would free up $13 billion in capital, creating 140,000 new jobs nationwide. In Wisconsin, it would create $408 million of new credit and add 4,437 jobs in the first year alone.

Increasing the cap will provide immediate benefits for small business because credit unions in Wisconsin. Forbes magazine has called increasing the cap a "no brainer." The fact is:

  • Since the financial crisis began in 2007, credit unions nationally increased business lending by 45% while banks decreased theirs by 15%.

  • Despite continued demand, almost all credit unions must deny loans because of the cap or can't offer any because the cap prevents cost recovery

  • Banks hold 95% of U.S. business loans; this legislation won't dent their market share

  • Only credit unions with the expertise and capacity to make more business loans would do so

  • There is no concern for safety;  Wisconsin credit unions have had a lower loss rate on business loans than banks for more than a decade

  • Federal regulators, more than 30 conservative and progressive groups, 84% of voters and over 70% of banks support the legislation

  • 50% of credit union business loans help families with income under $50,000

  • Raising the cap costs taxpayers nothing

  • Adding new jobs will create tax revenue when our country needs it most

Bottom line, the bill would create thousands of jobs and help jump-start our economy. It's about delivering the help that Wisconsin communities need.

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Tom Liebe, Vice President of Government Affairs
(608) 514-0082 •
Credit Union House: 1 East Main St., Suite 101, Madison, WI 53703-5109